Handicapping an Amazon Local Marketplace

Yesterday Reuters reported Amazon would be rolling out a local services marketplace “later this year.” The article speculated that could mean “anything from babysitters to handymen to birthday clowns.”

Amazon has been distributing local daily deals, in partnership with LivingSocial, since 2011. Originally LivingSocial was doing all the local sales for Amazon. It’s not clear whether that’s still true or whether Amazon has taken on any of the sales effort in the three years since inception.

In the UK, however, Amazon has experimented with its own direct telephone sales force. Accordingly the company does have experience with selling to local businesses.

Regardless of whether and how it approaches sales, the Amazon Local deals marketplace lays the consumer foundation for a broader “Amazon Local” offering that could turn it into a much more direct competitor of Google, Facebook, Yelp, YP and others.

Ads could take a variety of forms (search, display, video). They equally appeal to brands and national-local marketers that fulfill offline.

At the LSA conference earlier this year in Southern California we speculated about whether (or when) Amazon might move into local services and compete with Google et al.

Geekwire also reports that Amazon has “quietly been collecting” local reviews for the past month or so. All of this seems to suggest Amazon’s inevitable re-entry into the directory/local search market.

The company has enormous traffic and an extremely strong consumer brand. It also has payments, cloud services (hosting), mobile (and mobile hardware) and delivery services. Among other things, Amazon could host SMB websites (online + mobile), process their payments and provide an e-commerce platform for SMBs that sell goods.

The company could also deliver an array of marketing services and infrastructure support to SMBs in a “one stop shop” fashion.

Given its brand and loyal audience of millions, Amazon could relatively easily expand the scope of and use cases for Amazon Local. The real challenge would be engaging business owners and gaining SMB ad sales.

It could certainly use its brand strength and experience with telephone sales to its advantage in that area. Yet Amazon doesn’t need to generate local ad sales revenue right away. The company could operate a purely consumer facing local search/directory site (even for a few years) before it ever sought to generate ad revenue. But Amazon could, if it wanted, fairly quickly generate sales from national/brand advertisers that fulfill or distribute locally.

In terms of local sales, there’s very interesting discussion in the Reuters article:

In recent months, Amazon has reached out directly to service companies as well as to several startups in Seattle and San Francisco that already connect service providers, from home repair to massages, to customers through their own web sites and mobile applications, according to the people.

It thus looks like Amazon is contacting SMB aggregators, who do the direct sales and servicing of accounts. In that context, which I’m sure would be a temporary step, Amazon becomes a distribution or traffic source and, potentially, another alternative to Google. That might be welcome to many SMB channel partners.

It’s not a foregone conclusion that Amazon will launch this local marketplace, and, if launched, that it will succeed. But Amazon certainly has the potential to become a formidable competitor in the market.

While it’s premature to pick winners and losers, there are a number of companies that could suffer should Amazon “go for it.” What do you think?

Do you think that Amazon could/would succeed as a local consumer destination? Who might suffer or be adversely affected by such a move? And would the company have any greater success with SMB self-service and/or local ad sales?

Postscript: Amazon’s impending move into the smartphone market (next week) may be playing here as well. While Amazon has always been interested in the “Local”/SMB market, the rise of mobile and online-offline may have partly motivated the company to re-enter the segment.

7 Responses to “Handicapping an Amazon Local Marketplace”

I wonder what it would take for people like me to stop searching for local businesses on Yelp or Google. I’ve thought for years that Amazon should buy Yelp (or Fourquare) and own “reviews” for both products and services.

yeah this is pretty interesting. Makes sense that they could do for local merchants what they’ve done for products in terms of reviews and recommendations, that doesn’t seem like too much of a stretch.
Although in general I think that using reviews as the basis for local discovery could seemingly only take you so far, and building up a depository of original quality reviews is not a small task, and not one that Amazon seems particularly
well suited for, at least compared to the more organic “sell products therefore offer product reviews”.

This could be really quite interesting: ‘Among other things, Amazon could host SMB websites (online + mobile), process their payments and provide an e-commerce platform for SMBs that sell goods.”

if they were to introduce something in this area that would be much more interesting for local discovery/search imo. For some clients that already work with Amazon extensively online it seems like Amazon may have an advantage in selling these services in to the brick and mortar side, but for everyone else (the vast majority) it seems they’d face the same tough/long haul sales process.

But its interesting to speculate about, they certainly have some of key pieces there to give it a go.

Home services is a very big “industry” and Amazon knows this. However I don’t think it’s Houzz in particular driving this ambition (assuming the story is correct). I think it’s a broader concept that to some degree returns to Amazon’s early YP days.

Unless you’re doing your online shopping at a place that
has a physical location in your state, you’ll
most likely be able to avoid paying sales tax. One of the most visible advantages of online shopping is its convenience.